New firm authorisation information for applicant credit unions
This section is for firms applying to set up as a credit union and should be read alongside the information
provided on the PRA web page ‘Submitting, assessing and determining a new firm authorisation’.
A firm considering making an application to form a credit union should contact the PRA at [email protected] to arrange a pre-authorisation/registration meeting or conference
call. The Financial Conduct Authority (FCA) will also be invited to attend. This gives all parties the opportunity to
discuss and/or clarify any issues before the firm makes a formal application.
Assessment
The objective of the assessment stage is for the PRA and the FCA to assess new credit union applications
against the Threshold Conditions. This will include assessing whether the firm satisfies the Threshold Conditions
at both the point of authorisation and on an on-going basis. The PRA will make it clear to firms what it expects of
them through straightforward, clear communication of its policies and rules.
The PRA and FCA are each responsible for a set of Threshold Conditions that they will individually assess a
firm against. At a high level, the PRA Threshold Conditions require:
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a firm’s head office, and in particular its mind and management, to be
in the United Kingdom if it is incorporated in the United Kingdom;
a firm’s business to be conducted in a prudent manner and in
particular that the firm maintains appropriate financial and nonfinancial resources;
the firm itself to be fit and proper and be appropriately staffed; and
the firm and its group to be capable of being effectively supervised.
The following page gives an outline of material required as part of a submission for authorisation as a new credit
union.
Registration of mutual societies
Credit unions must be registered with the FCA. Registration forms for credit unions are included in the forms
repository and should be submitted to the PRA along with the application documents.
If you a firm is applying to be a credit union in Northern Ireland, you should contact the Department of Enterprise,
Trade and Investment (DETI), which is responsible for the registration aspect of applications.
DETI is responsible for registration matters such as rule changes and common bond arrangements.
Supporting documents for credit union applications
The following supporting documents must be prepared ahead of putting together an application pack in order for
the PRA or FCA to conduct their assessment. Without these documents the application will be classed as
incomplete.
Staff organisational chart
This is a chart to show the management structure and clear reporting lines. Further details are provided in the
core details form of the application pack as to what it should deal with. However, the minimum requirements are
the names of significant staff, direct reporting lines and direct reporting lines into the board.
Regulatory business plan
Supporting information required to answer questions on the following subjects:
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background to the applicant and business planning;
location;
members;
target markets and marketing plan;
personnel and internal controls;
a financial plan; and
outsourcing with third parties.
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membership figures and assumptions used;
income and expenditure account;
balance sheets;
capital and liquidity ratios; and
detailed assumptions used.
Financial projections
Financial projections should include:
Policies and Procedures manual
Policies and Procedures Manual that covers the following:
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committee of management;
internal audit;
money laundering;
training;
membership;
members’ savings;
lending;
provisioning policy;
financial risk management (for version 2 applications);
deferred shares policy;
arrears management;
cash handling and disbursement;
Information technology (IT);
business continuity;
record keeping;
complaints;
single customer view; and
liquidity.
Evidence of insurance provider
An example of evidence would be a letter from the insurer or trade association confirming the arrangement.
Letter(s) confirming Grant Proving
An example of evidence would be a letter confirming the arrangement and provision of the grant.
Appropriate Membership Qualification map
This is a map showing the area to be covered by the proposed membership qualification. The border delineation
should be a distinct and continuous line which should not give rise to any confusion in the future.
December 2014